The most important attribute of a cash reserve is its availability in time of sudden need. And while a federally insured savings account is considered one of the safest places to put money being reserved for emergencies, when interest rates are low, you may want to consider other alternatives.
When selecting ways to invest your cash reserve, you should balance your liquidity needs with potential returns. Short-term investment instruments, such as Treasury bills, certificates of deposit, and money market mutual funds, can provide you with the liquidity needed to meet expected and unexpected expenses and to increase your short-term investment income.
By actively managing your short-term cash reserves, you can provide a means of saving for the future. You can use this money to increase your net worth with little or no additional risk to your principal. It’s important to remember that since income and personal circumstances are subject to change, you should conduct a periodic review of your cash reserve and its structure.
Note:
- Treasury bills are backed by the full faith and credit of the U.S. government as to the timely payment of principal and interest.
- Bank CDs are insured by the FDIC for up to $250,000 per depositor, per insured institution in interest and principal.
- Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in mutual funds.
- Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus before deciding whether to invest.
If you have questions or need guidance, please contact the experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
